Probate fee increase is back from the dead

Ministers may proceed with controversial plans to increase probate fees by up to £20,000, experts warn today.

Charity and legacy specialists say that they are concerned that the plans, dubbed a “death tax” and shelved before the general election, have only been put on hold.

In a letter to The Times yesterday, the Institute of Legacy Management and 12 other organisations say that fears are emerging that the proposals may be resurrected. The organisations wrote: “We are concerned that new fees would significantly reduce income for charities reliant on legacy gifts – to the tune of £18 million a year – because many organisations are struggling to meet increased demand for their services.”

In April a parliamentary committee said that the huge increases were unlawful and that Liz Truss, lord chancellor and justice secretary at the time, might have been overstepping her powers by introducing them. The rises had the “hallmarks of taxes rather than fees”, the parliamentary joint committee on statutory instruments said, given that payments would increase from £155 to £20,000 for larger estates.

The new rates are expected to raise £300 million to fund the courts and tribunal service and replace the present flat-rate system of charges between £155 and £215.

The committee’s highly critical report said that the changes could breach the constitutional principle that there should be no taxation without the consent of parliament. It called for the proposals to “have the attention” of both houses. In its report, the committee questioned whether “the lord chancellor may use a power to prescribe non-contentious probate fees for the purpose of funding services [the courts] which executors do not seek to use”.

Under the plans there would be no fees on estates of up to £50,000 but those on estates worth between £1 million and £1.6 million would be £8,000; estates worth between £1.6 million and £2 million would attract fees of £12,000; and estates above £2 million fees of £20,000.